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On 19 August 2019 - US, Europe rise on Huawei news, stimulus talk; Asia up

Anne D Picker

Anne D Picker - Econoday

US’s Ross says Huawei ban delayed 90 days.

US markets

Major US stock indexes advanced Monday after US Commerce Secretary Wilbur Ross’s said the US would delay implementing its Huawei ban for another 90 days, and on hopes for more government stimulus. The Dow industrials rose 1.0 percent, the S&P 500 rose 1.2 percent, and the NASDAQ rose 1.4 percent.

Markets were also bolstered by a Bloomberg report that China may allow provincial governments to issue more debt for investment to boost economic activity in light of the US-China trade war. Bloomberg also reported Germany is preparing a fiscal package to boost its slowing economy. Reuters reported the People’s Bank of China was planning interest rate reform that would lower borrowing costs for companies.

Energy, technology, and communications services, including the FAANG stocks, led the market higher. Apple was a notable winner, up 1.9 percent. Consumer discretionary shares outperformed, with retail and gaming shares better. Nvidia rose 7.1 percent on news its chips would be used in Microsoft’s Minecraft game. Industrial stocks were relatively soft as General Electric (down 1.5 percent) gave back some of Friday’s gains. Defensive sectors and materials underperformed, with precious metals miners tracking metals prices lower. Consumer staples lagged, although though food service company Aramark surged 8.4 percent on takeover talk.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude rose US$1.13 to US$59.77, while gold fell US$17.60 to US$1,506.00. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield rose 5 basis points to 2.08 percent while the yield on the 10-year note rose 4 basis points to 1.60 percent.

European markets

European equities rose Monday, with support from gains on Wall Street after positive comments from a US official on Huawei, plus reports suggesting China and Germany are considering additional stimulus. The Europe-wide STOXX 600 rose 1.1 percent, the German DAX gained 1.3 percent, the French CAC rose 1.3 percent, and the UK FTSE 100 gained 1.0 percent.

In policy news, Bloomberg reported Berlin is working on a plan to implement fiscal stimulus if the economy falters. This echoes a report earlier this month from Der Spiegel which said Germany would consider deficit spending to support initiatives to address climate change and to prevent recession.

In corporate news, Greene King, the UK pub and brewery firm, soared by 51 percent on word that it would be acquired by China’s CK Asset Holdings. Outperformers included travel and leisure, basic resources, oil and gas, and retail. Underperformers included food and beverage, banks, real estate, and health care.

In economic news, Eurozone inflation was revised a little softer in July. At 1.0 percent, the final annual rate was a tick lower than its flash estimate and down 0.3 percentage points from the final print in June. A tick short of market expectations, it was the lowest outturn since November 2016. Of more significance to the financial markets, there were no amendments to the annual core rates. Hence, excluding energy, food, alcohol and tobacco, the narrowest gauge was unrevised at just 0.9 percent, down 0.2 percentage points from the June outturn, while omitting only energy and unprocessed food the unrevised inflation rate similarly shed a couple of ticks to 1.1 percent.

Asia Pacific markets

Major Asian markets posted solid gains Monday following the lead set by Wall Street on Friday. Regional data and news flow were limited, though tensions in Hong Kong remain a key focus on concern. The Shanghai Composite index and Hong Kong’s Hang Seng index were the strongest performers in the region, up 2.1 percent and 2.2 percent respectively, while Australia’s All Ordinaries index advanced 1.0 percent. The Nikkei and Topix indices underperformed the moves seen in the US on Friday and elsewhere in the region Monday, closing up 0.7 percent and 0.6 percent respectively.

Japanese trade data was the main highlight of the regional trade calendar Monday, with the merchandise trade balance shifting from a revised surplus of Y589.6 billion in June to a deficit of Y249.6 billion in July. Exports fell 1.6 percent on the year in July after dropping 6.6 percent in June, with somewhat stronger growth in exports to China, the United States and the European Union. This improved but still subdued growth in external demand is broadly in line with previously released Chinese and Singaporean data. Imports fell 1.2 percent on the year after dropping 5.2 percent previously, with this smaller drop in headline growth mainly driven by a sharp rebound in iron ore imports. New Zealand data showed more subdued producer price inflation in the three months to June.

Looking forward

On Tuesday in Asia/Pacific, the Reserve Bank of Australia monetary policy meeting minutes are due for release. In Europe, the following reports are scheduled: German PPI, Swiss merchandise trade, and UK CBI Industrial Trends Survey. In North America, Canadian manufacturing sales data will be released.

Global stock markets

 

Index

19 Aug 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26135.79

249.78

1.0

 

NASDAQ

8002.81

106.82

1.4

 

S&P 500

2923.65

34.97

1.2

Canada

S&P/TSX Comp

16304.05

154.26

1.0

Europe

 

 

 

 

UK

FTSE 100

7189.65

72.50

1.0

France

CAC

5371.56

70.77

1.3

Germany

XETRA DAX

11715.37

152.63

1.3

Italy

MIB

20715.49

392.90

1.9

Spain

Ibex 35

8733.3

62.90

0.7

Sweden

OMX Stockholm 30

1538.97

19.56

1.3

Switzerland

SMI

9825.59

97.20

1.0

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6550.49

64.56

1.0

Japan

Nikkei 225

20563.16

144.35

0.7

 

Topix

1494.33

9.04

0.6

Hong Kong

Hang Seng

26291.84

557.62

2.2

S. Korea

Kospi

1939.9

12.73

0.7

Singapore

STI

3128.45

13.42

0.4

China

Shanghai Comp

2883.1

59.27

2.1

Taiwan

TAIEX

10488.75

67.86

0.7

India

Sensex 30

37402.49

52.16

0.1

Note: all releases are listed in local time.

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